1. Field of the Invention (Technical Field)
The present invention relates to the field of electronic commerce.
2. Background Art
Factoring includes buying and selling accounts receivable and credit insuring. Accounts receivable are purchased based upon the assumption that the accounts receivable are valid and collectable. Accounts receivable are sold in order to quickly obtain cash for cash flow purposes, rather than to retain them as receivable. Accounts receivable are also frequently used to borrow money upon, in order to finance other unrelated transactions. Factoring also includes credit insuring which occurs when an entity insures payment of an account receivable for a vendor, so that if the buyer does not pay, the insurer will. With the recent rapid growth of information applications on the Internet, computer networks have the potential to establish a new kind of open market place for goods and services. Buyers and sellers increasingly want to use the Internet to conduct their business electronically. This new method of doing business is referred to as electronic commerce, or “e-commerce.”
The timely and costly process of processing paper requests for transactions such as the buying and selling of accounts receivable, as well as goods and services, plagues business transactions. Furthermore, buyers and sellers must expend significant resources to make appropriate credit decisions regarding a transaction. In procurement transactions, it is customary for the transaction to involve some form of credit, such as “open account trade credit,” provided by the seller generally at no charge to the buyer but for a set period of time, normally thirty days. Buyers generally do not explicitly pay for the receipt of open account trade credit, and consider this free credit part of the established buyer/seller relationship. Credit cards are also available for relatively small purchases and operate by having a financial institution issue the credit card, and a merchant bank provide the cardholder with a revolving line of credit that can be used to buy goods from sellers who accept the credit card. This allows the cardholder to pay for credit card purchases over a period of time at an interest rate set by the merchant bank.
Other types of credit are travel and entertainment cards, which unlike credit cards, are considered to be open-ended credit with payment in full due at the time of billing, and does not extend revolving credit to the buyer, or cardholder. Credit cards, travel, and entertainment cards provide a uniform level of risk assessment to the seller and the seller pays a pre-determined interchange fee regardless of the actual credit risk presented by the buyer.
Commercial transactions are evolving to include electronic communication of financial transactions. Advances in computer networks and communication systems now apply to processing purchase and credit transactions. An important application of new computer technology is electronic commerce, which includes using electronic networks as a marketplace for business and consumer transactions. Electronic commerce services can include electronic brokerages, distributorships or clearinghouses that facilitate trade with electronic interchange media, such as public networks, for example the Internet, or proprietary access networks.
Electronic commerce, however, does not currently offer financial services to sellers, such as payment and credit assessments of buyers, electronic factoring and credit insuring of transactions. This need is usually fulfilled by relying on traditional techniques of credit analysis and payment before a transaction can be completed.
Various patents discuss methods of performing e-commerce wherein buyers and sellers are connected, but none address the issue of electronic factoring and credit insurance. U.S. Pat. No. 4,992,940, to Dworkin, entitled “System and Method for Automated Selection of Equipment for Purchase Through Input of User Desired Specifications,” discloses an automated system that assists the user in locating and purchasing goods and services sold by a variety of vendors. U.S. Pat. No. 5,732,400, to Mandler et al., entitled “System and Method for a Risk-Based Purchase of Goods,” discloses a financial clearinghouse for receiving requests for goods or services from a buyer and making a real-time determination of a risk classification of the buyer using an online repository of credit information. U.S. Pat. No. 5,757,917, to Rose et al., entitled “Computerized Payment System for Purchasing Goods and Services on the Internet,” discloses a computerized payment system that prequalifies and pays a buyer's order through a third party, but is not a guarantee-of-payment mechanism. U.S. Pat. No. 5,822,737, to Ogram, entitled “Financial Transaction System,” discloses an automated payment system allowing a consumer to purchase goods or services over the Internet with a credit card that is verified before making the payment. U.S. Pat. No. 5,802,497, to Manasse, entitled “Method and Apparatus for Conducting Computerized Commerce,” discloses the use of a broker, broker scrip, vendor scrip, and currency to sell parts and services and deliver to the consumer. U.S. Pat. No. 5,745,886, to Rosen, entitled “Trusted Agents for Open Distribution of Electronic Money,” discloses using a customer trusted agent and merchant trusted agent and establishing a cryptographically secure session, and to provide electronic money purchase or sale information and an account credential to the merchant trusted agent. U.S. Pat. No. 5,557,518, also to Rosen, entitled “Trusted Agents for Open Electronic Commerce,” also discloses the use of trusted agents, establishing a cryptographically secure session and electronically transferring funds in purchasing merchandise. U.S. Pat. No. 5,717,923, to Dedrick, entitled “Method and Apparatus for Dynamically Customizing Electronic Information to Individual End Users,” discloses maintaining a personal profile database to store consumer information and a consent adapter to compare electronic information received by a client system to consumer information in the personal profile database.
U.S. Pat. No. 5,717,989, to Tozzoli et al., entitled “Full Service Trade System,” discloses storing criteria specified by a funder relative to trade transactions for buyers and sellers and comparing the criteria with a proposed purchase order in order to determine whether the system can generate a payment guarantee on behalf of the funder for the buyer to the seller. U.S. Pat. No. 5,826,241, to Stein et al., entitled “Computerized System for Making Payments and Authenticating Transactions Over the Internet,” discloses a payment system that provides cardholder accounts for first and second Internet users and making queries to the first user on whether to proceed with payment to the second user. U.S. Pat. No. 5,842,178, to Giovannoli, entitled “Computerized Quotation System and Method,” discloses a computer-based communications network of members for processing requests for quotes for goods and services, as well as storage containing the identification of the members and means for transmitting and broadcasting requests for quotes. U.S. Pat. No. 5,694,551, to Doyle et al., entitled “Computer Integration Network for Channeling Customer Orders Through a Centralized Computer to Various Suppliers,” discloses an electronic requisitioning system that channels customer orders to internal suppliers and outside vendors, and processes invoices. U.S. Pat. No. 5,671,280, to Rosen, entitled “System and Method for Commercial Payments Using Trusted Agents,” discloses a system for electronic payment using a customer trusted agent and a merchant trusted agent. U.S. Pat. No. 5,664,115, to Fraser, entitled “Interactive Computer System to Match Buyers and Sellers of Real Estate, Businesses and Other Property Using the Internet,” discloses automatically connecting sellers of property with potential buyers, preferably over the Internet, wherein the host system stores records regarding the properties and can be searched by potential buyers, and the system permits evaluation of potential buyers to screen them.
Various articles have been written which disclose forms of electronic payment methods, but these methodologies only relate to moving money around, from one account to another, electronically and do not address the present need in the marketplace for electronic factoring.
The present invention overcomes all of the limitations of the prior art and addresses the need for an electronic commerce version for factoring. The present invention enables buyers to purchase goods from vendors with a third party guarantee to the vendor via electronic factoring that guarantees the payment. By using the present invention, electronic factoring, including credit insurance, is performed in an efficient manner. The present invention enables buyers to obtain goods and services immediately without having to pay for them at the time of the transaction.
The present invention is a credit database set up for all users that assigns a credit limit to the customers for credit as well as a credit instrument for guarantee of payment to vendors. Payment is guaranteed through a banking partner, the guaranteeing financial institution, who guarantees all receivables that are created through the sales on the platform (entitled “ProfitScape” in the Figures) to ensure payment and security of the transaction. The system tracks and maintains a database that details credit dollar amounts available and account activity of each user. The present invention defines a credit-worthy marketplace that enables users, who become members, to purchase goods and services on credit based on their respective financial positions which have been evaluated by the guaranteeing financial institution.